The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

3/29/14

The enviro control bodies in Peru aren't very happy with the way in which Chinese capitals Toromocho is going about its business, even in these early days of the big copper mine. Between March 16th and 20th they witnessed how the company is letting polluted water run striaght into the local lagoons (you can see it all above, as straightforward a case as can be imagined) and now the company has been ordered to stop work until it has its enviro act together.

So what do you do if a 32 year old has a heart attack and dies on the plane on which you are travelling? Do you 1) film the cabin crew as they try to save the person's life then 2) publish your video on Facebook while 3) complaining of your personal inconvenience after being forced to continue your journey while being near a dead body?

If you're Todd Anthony, VP Investor Relations at First Majestic Silver (FR.to) (AG),that's exactly what you do. And with luck you get to complain when your boss fires your sorry ass for being a total piece of shit as a person afterwards, too.

3/27/14

A long overdue and good thing that will piss off the hardline lefties behind Maduro and the hardline righties behind Capriles/López, but us normal people in the range of right middle and left welcome the development. According to latest reports of this developing storythe Chancellors (i.e. foreign ministers) of Colombia, Brazil and Ecuador will mediate in talks between the government of Venezuela and the opposition in Venezuela, in an attempt to bring a little sanity and peace to the situation.

Jaw Jaw is better than War War. Winston Churchill dixit, and he was right.

It beats me why the English speaking world has to find out about these things from a pissant blog like this, rather than having the company do the right thing and disclose serious events at its mine in the right way, via its own IR department.

On Monday, one worker at Limón died from electrocution

On Tuesday, four workers at Limón were seriously injured when a tube conveying scalding hot water came loose from a pump they were maintaining. The four are still hospitalized and no word on their condition.

C'mon Clive, this is the 21st century! Be first with the bad news and make it look better than this, not freakin' IR amateur hour playing catch-up to a blogger..

...that's the story going around started by member of Congress Yehude Simon (ex-PM in the Alan García government) yesterday that Ollanta Humala has a child out of wedlock, that Nadine is going to divorce him over the revelations and that the APRA party are going to use the story as a way of deflecting attention away from the results of a corruption commission currently underway that threatens to scupper Alan García's re-election plans.

Colombia's minister of the environment, Luz Helena Sarmiento, has stated this week that the decision on where to put the new limits of the regional nature reserve at the páramo de Santurbán will be disclosed "either on Sunday or Monday" (i.e. March 30th or 31st). This long-delayed decision will determine whether mining companies in the region (particularly those working out of the town of Vetas, just to the West of the nature reserve), will be allowed to move forward and develop their concessions.

Subscribers know exactly how your humble scribe believes the decision will go and how he's playing it. The Colombian government's decision on this has been too long in coming, but the wait is about to come to an end.

The perfect mining company for all those who prefer their CEOs to be more interested in flipping their own stock and playing the market than concentrating on the minor things, such as running the company.

This is the short bit of prose that introduces The Chart, and here it is:

Your eyes are then directed to the specific feature of the chart by this second paragraph. You naturally understand the lead-up to this moment because it's there in front of you and charted, but the analysis hinges on the smart interpretation that's being offered on what is about to happen. The point is made and the readers' confirmation bias sets up the glowing, warm feeling that was the whole point of the post.

We round off with an extra comment used to add a potentially wider scope to the datapoint under discussion. This also fits in with the readership's preferred worldview and helps ensure that the author will receive increased traffic in the future.

3/26/14

Venezuela's currently jailed opposition leader Leopoldo López wrote en op-ed for the NYT yesterday. If you're into LatAm affairs I fully expect that you read it, but here's the link. Yesterday, here's how a key section of Lopéz's article was written and published:

"Since student protests began on Feb. 4, more than 1,500 protesters have been detained, more than 30 have been killed, and more than 50 people have reported that they were tortured while in police custody"

And here's how it reads now:

"Since student protests began on Feb. 4, more than 1,500 protesters have been detained and more than 50 have reported that they were tortured while in police custody. Over 30 people, including security forces and civilians, have died in the demonstrations."

Spot the difference? Well if not, here's the NYT explaining the correction at the end of the piece:

Correction: March 26, 2014An earlier version of this article incorrectly stated that the more than 30 people killed in the political demonstrations in Venezuela since Feb. 4 were protesters. That number includes security forces and civilians, not only protesters.

Apologies in advance if these facts do not concur with your preferred version of the truth. But fear not, there's always a version that's more palatable to one's politics out there and fortunately in this case, it doesn't take much looking to find one.

Vanessa Davidson of CRU speaks, the copper world listens. She's hard data, minimum speculation, with a track record for accuracy and unlike so many other loudmouths that get their names in bizwire reports as a quotable person, she's worthy of your respect. Read her latest thoughts at this Bloomie pieceand if you're thinking that maybe it's a good thing to make some money by playing the copper sector this year, pay close attention.

Funny how Sprott Resource (SCP.to), flagship of one of the world's biggest loudmouths on the ownership of bullion and the evils of fiat,sold all its gold at the very bottom of the downdraft. In fact it's almost certainly "had to sell" and that makes it even more guffaw-worthy, how Eric was forced into toeing the line with his imaginary ghosts. The seething resentment there must be at thermonuclear levels.

Adam Isacson is one of the kingpins of WOLA, who are second to none for knowledge of Colombia. Here's his post plus photos of the mess that illegal gold miners are making in the Chocó region of the country, especially along the Atrato River. Very similar to the Madre de Dios mess in Peru, in fact. However, the proceeds of this mining go to armed groups in Colombia so perhaps double negative here.

"I have to tell you here, surprisingly but I have to tell you; Last night we captured three Avation generals who we have been investigating thanks to the powerful morale of our National Bolivarian Armed Forces".

...you can take this CEO's comment section from the ALT.v NR today and insert it neatly into the public declarations of dozens of other explorecos. Just change the names.

"As with many junior mining companies, Alturas is currently going through a tight cash position and does not have sufficient funds to continue its exploration operations in the normal course. However it maintains positive expectations and is in the process of seeking to secure sufficient additional capital to maintain its existing property holdings until the industry downward cycle recovers. Alturas also remains very optimistic with respect to the mineral potential of its projects and is evaluating alternative plans for exploration. We are currently having conversations with various mining companies and private investors that are strongly interested in a joint venture partnership to develop these and other projects from our high-quality property portfolio in Peru and Chile."

Let's check the boxes, shall we?

Tight cash position

Positive expectations

Very optimistic

Alternative plans

Joint venture partnership

High-quality property portfolio

The suicide note continues here. In the specific case of ALT.v, its 132m shares out and 3c share price mean that these promising properties (which have been picked over for years without any of that promise turning into something greater) plus precisely fuck all in the treasury chest is somehow worth $3.3m in market cap.

The sooner these companies are out of business and the jokers running them leave the sector, the better for all of us.

That Blasutti may not have a clue about how to run a mine but he sure knows how to put the best possible shine on those books of his.

As a slight aside, my fave linein the NR out yesterday was "If Small Mine Plan implementation costs were excluded, the Galena Complex would have made an operating profit of approximately $0.9 million in the second half of the year." That's because if those costs weren't included, USA.to would still be fracturing cash at the old rate and would have made an even worse loss, so cool bit of tautology there.

But anyway, the real fun happens over in the financials and Drumlummon is the bit that catches the eye, because it's the easy window on the orchestral qualities of the book-keeping. That's because apparently, according to USA.to and all that, you can have a mine that's fracturing cash to such an extent that it's closed don on May 31st 2013 (sorry, it's 'put on care and maintenance') but its goodwill value is left unchanged (USA insists it has a goodwill value of $12.78m, unchanged from YE2012, which could only be the goodwill of somebody like Eric Sprott) and its asset carrying value is cut by a mere $1.4m to $4.8m. In other words, a gold mine that was such a lossmaker when gold was priced at U$1,394/oz that is was closed down, is worth $4.8m today.

But anyway, here we are in 2014 and the company is now running its "Small Mine Plan" (which, surprise surprise and despite six months of hype, hasn't seen it return a net profit after all). It's a good bit of marketing and labelling (what do you expect from a CEO who was previously the investor relations guy at Barrick?) but it's not much more than cutting $12m of necessary development costs and pretending they're not needed any more, then cutting workers down to the number needed to mine the high grade zones of its mine. And you never know, in 2014 the company might just be ab le to break even, but never mind that it's fucking over its resource for future years. Then people in this sector wonder why the rest of the business world avoids mining companies as long-term growth opportunities.

A friend of mine is owner of a small specialist financial house that provides analysis to third parties as well as running its own funds. He covers EMs a lot, his funds run money through world markets large and small, he's good at what he does. In his monthly letter today, after musing a while on gold this is what he had to say about gold stocks:

"For myself, I have learned from brutal experience (in 2008 and 2011-12) that the safest path is to leave gold itself alone and simply use the gold price as a leading indicator for other prices in the economy. Also, I took a run through some gold names I used to cover and quickly got PTSD, remembering all the lies they told investors."

Or in terms that even you morons can understand: You're not attracting investment cash because you're a bunch of fuckers who screw people over.

Here’s one of those reports that could be in ‘Regional
Politics’ or in ‘Market Watching’, because a political event looks set to
affect a widely traded stock. It’s also a potential for a short, because Sandstorm
(SAND) (SSL.to) has rallied recently after doing a great job of carving up what’s
left of Colossus Minerals (ex-CSI.to) (ex-COLUF) and keeping the lion's share
for itself (perhaps 50% when it’s all done and dusted) and winning few friends
from the retail holders of Colossus who have been diluted to virtually zero.
However, they may just end up holding a great big bag of nothing, because
Brazil's parliamentarians have just presented a law bill to the national
congress that would strip Colossus Minerals (or what's left of it) of its
concession rights and hand the whole thing back to the local Coomigasp
co-operative, due to bribes paid by ex-Colossus to ex-Coomigasp leaders. Here’s
the report (24) and here’s my best
translation (by the way, I’ve been
working on my Portuguese and I’m fully happy on how this trad came out):

The Draft Legislative Decree 1407/13,
pending before the House of Representatives, would repeal the granting of the
gold, palladium and platinum mining concession in Serra Pelada in Curionópolis,
Para State to the Serra Pelada Mineral Development Company . The law bill would
cancel Ordinance 514/10 of the Ministry of Mines and Energy .

With the cancellation of this
ordinance, according to the authors of the law bill, the rights to the mine
would return to the Cooperative Mining Prospectors of Serra Pelada (Coomigasp)
.

According to the parliamentarians, in
2007 the National Department of Mineral Production (ANP ) granted the license
to Coomigasp to mine the concession. Afterwards, as previously reported, a
number of transactions by directors of the cooperative with the Canadian
company Colossus culminated in the loss of almost complete control of the
miners on Serra Pelada .

So, not only may the Serra Pelada concession be stripped
from its current owners, but the reason for the stripping is that Canadian
executives have bribed local officials. That means the old directorate of
Colussus, Ari Sussman and friends, who are now happily working away and
promoting another large (and in my view overvalued) project, Buritica in
Colombia under Continental Gold (CNL.to).

UPDATE: Special message for the fuckwits who are stupid enough to fawn over that serial scamster, Mexico Mike

In the red corner, we have thousands of informal/illegal miners blocking the main Panamericana Highway at strategic points of South coastal Peru this Monday morning. They don't want to go through the formalization process being imposed upon them by the government because they say it's very expensive and will put them out of business.

In the blue corner we have the government, who has already sent troops to the spots and has said this morning that the roadblocks will be cleared.

Which means that either the miners back down and let the vehicles through, or there will be blood. Here's hoping that nothing else needs to be posted on this today.

Total Pageviews

The information and opinions contained within this site reflect the personal views of Inca Kola News and therefore all material within should not be construed as accurate or reliable or be utilized as advice for investment or business purposes. Independent due diligence and discussions with ones own investment and business advisors is strongly recommended. Accordingly, nothing on this site should be construed as offering a guarantee of the accuracy or completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. All opinions and estimates included on this site are subject to change without notice. All content may be reproduced under fair use doctrine providing proper credit and a return link is made to this site.